Tips for a first time property buyer?
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Think 5-10 years down the road. Then think worse than that.
Example:
My house that is finally selling after 2 years on the market has a horrible floor plan.
It is a great old house (built in 1900) but the floorplan is really bad for a 2 bed 1 bath.I closed on it in the morning and then proposed to my wife that night.
Plan:
Spend the summer after the wedding finishing the half-story to make it a very nice 2 bed 1 bath.
Spend the next year doing basement work to finish 2 rooms and a bathroom.Reality:
Lost my job 2 weeks prior to my wedding. Did not work for 6 months.
Got pregnant 2 weeks after the wedding. Paid COBRA due to this.
New job was $20k less than old job. Hello debt.
Pregnant again (planned).
Still at crappy job.
Finally find real work 2 years later (current job).
Pay off debt.
Put house on market for 2 years.
Lose $1000 to finally get contract on house.We love this house. but it is too small for a family of 4 with none of the originally planned work done on it.
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Same here.... bought second house (second ever, we had already sold the first one some time before) because we were pregnant. Got a "great" deal. Way below market for the area. Had baby a month after moving in.
Found out a few months later I was being relocated to Texas. House had dropped $100,000 in value and there was no way to sell it. Spend half a year before we found renters, when we did find them they only paid about 65% of our monthly costs on the house AND lost their jobs and often couldn't manage to pay the bills.
Seven years later.... still saddled with the house. Still lose thousands every month. Still no way we could ever sell it.
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I bought a house in August of 2013. Really nice old modified Cape built in 1907. It was at a price point that I could comfortably afford while still doing work on it and having some rainy day money. The plan was to do the bare necessities to get it in shape so we could sell it in a few years when either my girlfriend (now fiance) or I got a new job.
Then the first winter came... we spent 4x what I estimated in heating costs. During this time the septic line (in ground tank no town sewer) so we had to replace that. Two trees needed to come down as they threatened my house and our neighbor's house. Driveway wasn't done correctly originally so we had to replace that. The roof is on the docket for next year. To solve the heating issue we went with an alternative fuel source, which has paid for more then half itself in one winter.
It has been a long, nerve racking almost two years that we have been in this place.
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@Nic said:
Make sure you go walk through the property with the building inspector so he or she can show you stuff in person. It's very educational and you can ask questions, rather than just skimming the report afterwards.
Make sure you budget in for house repairs, as there's something that will need fixing every couple of months.
I can't emphasize this enough. Walk through with your inspector, you are paying him to find issues you are his customer, not the bank, the sellers, or real estate agent. Ask as many questions as you can during the inspection to get a good understanding of what to look for and pain points for future homes.
On the second house we put an offer on the front wall was becoming dislodged from the house. The inspector was really the only one to notice it, that put a full stop on everything and we passed on the house even though it would have been perfect for us.
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Always ask tons of questions about heating costs. They will give you this random number that seems decent. But then you find out that is with keeping the house at 50 and having space heaters everywhere.
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@Minion-Queen said:
Always ask tons of questions about heating costs. They will give you this random number that seems decent. But then you find out that is with keeping the house at 50 and having space heaters everywhere.
Agreed - get them to show you actual bills.
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Another one I remembered. To get a good feel for the neighborhood, go walk around and knock on doors on the weekend and chat with your prospective neighbors. They'll give you a good sense of what the place is like.
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@Nic said:
@Minion-Queen said:
Always ask tons of questions about heating costs. They will give you this random number that seems decent. But then you find out that is with keeping the house at 50 and having space heaters everywhere.
Agreed - get them to show you actual bills.
Our power company allows you to call them and ask the cost of the electric bill for previous tenants at that address. This will give you a real idea of power consumption. In Florida, summertime electric bills are more than winter time. Obviously its reverse in NY and Canada. Get an idea of what the power bill is in January, April, June, and October. That should give you a clear picture.
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Oh, I forgot the most important one - FIND OUT WHAT KIND OF INTERNET SPEEDS YOU GET BEFORE YOU BUY!!!!
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@Nic said:
Oh, I forgot the most important one - FIND OUT WHAT KIND OF INTERNET SPEEDS YOU GET BEFORE YOU BUY!!!!
Yeah, don't want to find out your options are satellite, dial-up or DSL...
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@Nic said:
Oh, I forgot the most important one - FIND OUT WHAT KIND OF INTERNET SPEEDS YOU GET BEFORE YOU BUY!!!!
And don't trust the sales person on the other end of the phone... ask to speak to their manager or go down to the regional offices.
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we bought our first house just over 2 years ago here how it went:
both had jobs
got pre-approved (but just because we got pre approved for a certain amount didn't mean we wanted that large of a payment)
looked at 30 houses over 2 month
went under contract
paid for several inspections
walked away after said inspections found foundation damage (lost cost of inspections)
looked at 6 more houses
under contract and we moved in
wife lost job the day our first mortgage payment was due
wife got very sick (massive debt from medical bills)
stayed in house and doing awesome now.always have a contingency fund (that allowed us to stay in the house for a year before she got a job and was feeling better). Factor into your monthly payment property taxes, pmi (if you don't have 20% down), homeowners insurance (you can call your agent and ask what the typical rate is for a house that you are looking at). Remember to include in the cost of purchasing your house, the tools to maintain it such as a lawn mower, trimmer, hedge clippers (if you have them), in my case I also needed a snow blower and shovels.
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@Nic said:
Another one I remembered. To get a good feel for the neighborhood, go walk around and knock on doors on the weekend and chat with your prospective neighbors. They'll give you a good sense of what the place is like.
We had people do this to us in Texas and we were able to tell them that the house had been on and off the market, who else was looking at it and that the foundation had failed!
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@Nic said:
Another one I remembered. To get a good feel for the neighborhood, go walk around and knock on doors on the weekend and chat with your prospective neighbors. They'll give you a good sense of what the place is like.
This is a good tip... I will have to remember that for the future.
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Good grief, thank you all! I'm slightly more worried than I was previously. Lots of excellent advice and some stuff to ponder for sure.
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Around here houses for a single guy low on the ladder in IT are just way way out of the budget ( they start around 400/450 for a fixer upper). I'm looking for a less expensive condo, but keeping in mind the strata fees. Example: 200k mortgage, but 500mth in strata is roughly the same monthly payment as a 350k mortgage.
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I think the rule of thumb is 4 times your household salary is the upper limit for a house you can afford.
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@Nic I want to keep it under that if at all possible. Agreed it's a good rule.
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Also compare rents to mortgages for an equivalent property. If the mortgages are way more than rentals, then you know your area is in a housing bubble and it's probably best to rent and save the difference between the two until house prices come back in line with reality. Don't make the mistake we did of buying at the height of the bubble in 2008 and then having to shortsell our house for half of what our mortgage was for.
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@Nic ouch that had to hurt....
